CHAPTER 12: INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS LECTURE 20
Leverage the Brand • Firms are seeking to build “power” or “mega” brands that establish a broad market footprint, appealing to multiple customer segments with multiple products all underneath the brand umbrella.
Brand Extensions • When a firm uses an established brand name to introduce a new product • Brand extension classification • Line extension • Using a sub-brand to target a new market segment within the same product category • Category extension • Using the parent brand in a different product category
General Strategies for Establishing a CategoryTauber’s Franchise—Extension • Introduce the same product in a different form. Example: Ocean Spray Cranberry Juice Cocktail • Introduce products that contain the brand’s distinctive taste, ingredient, or component. Example: Philadelphia cream cheese salad dressing • Introduce companion products for the brand. Example: Coleman camping equipment • Introduce products relevant to the customer franchise of the brand. Example: Gerber insurance • Introduce products that capitalize on the firm’s perceived expertise. Example: Honda lawn mowers • Introduce products that reflect the brand’s distinctive benefit, attribute, or feature. Example: Lysol’s “deodorizing” household cleaning products • Introduce products that capitalize on the distinctive image or prestige of the brand. Example: Calvin Klein clothes
Advantages of Extensions • Facilitate new product acceptance • Improve brand image • Reduce risk perceived by customers • Increase the probability of gaining distribution and trial • Increase efficiency of promotional expenditures • Reduce costs of introductory and follow-up marketing programs • Avoid cost of developing a new brand • Allow for packaging and labeling efficiencies • Permit consumer variety seeking
Advantages of Extensions (Cont.) • Provide feedback benefits to parent brand • Clarify brand meaning • Enhance the parent brand image • Bring new customers into brand franchise and increase market coverage • Revitalize the brand • Permit subsequent extensions
Disadvantages of Extensions • Can confuse or frustrate consumers • Can encounter retailer resistance • Can fail and hurt parent brand image • Can succeed but cannibalize sales of parent brand • Can succeed but diminish identification with any one category • Can succeed but hurt the image of the parent brand • Can dilute brand meaning • Can cause the company to forgo the chance to develop a new brand
Understanding How Customers Evaluate Brand Extensions • Managerial assumptions • Consumers have some awareness of and positive associations about the brand in memory • At least some of these positive associations are evoked by the brand extension • Negative associations are not transferred from the parent brand • Negative associations are not created by the brand extension